1. Technical Field of the Invention
The present invention relates generally to intellectual property, and more particularly to a business arrangement for one or more entities to share in the intellectual property assets of another, and the management of investments in such intellectual property assets.
2. Description of Related Art
In the past, intellectual property assets (including but not limited to the right of publicity, patents, trade secrets, know-how, copyrights, software, trademarks, domain names, and licenses) have had little understood value as an asset, sometimes leading to a determination of having no value as assets. Intellectual property assets have been classified as “intangibles” on corporate balance sheets. Related assets, such as products and technologies based in large part upon such intellectual property, have also frequently been assigned little or no concrete value.
In large measure, simply placing a value on intellectual property has been difficult, and has led to much of the public's and investors' confusion over the valuation of intellectual property, leading to the conventional diminution of value placed on intellectual property. Many attempts have been made at developing dependable and accurate valuation methods and processes for intellectual property and related assets, most unsuccessful.
It would be beneficial to provide not only an accurate valuation method for intellectual property, but also a business model to more successfully leverage the inherent value of the intellectual property to the owner. Further, it would be advantageous to provide a financial instrument to enable others to benefit, along with the intellectual property owner, in the value of the intellectual property.
Various financial instruments are known, and can be used in various ways in investment plans in intellectual property. For example, a derivative is a financial instrument whose value is based on the value of another security or underlying asset. A derivative can be used as an investment vehicle. That is, a derivative is essentially a financial instrument whose value is derived from the future movement of something that cannot be predicted with certainty. A derivative is a contractual relationship established by two or more parties where payment is derived from some agreed-upon benchmark.
Forward and futures contracts, the latter of which are standardized and may be exchange-traded, are transferable agreements to buy or sell a commodity, such as a particular crop, livestock, or oil. These contracts typically involve two parties agreeing upon the manner, place, and time of delivery of a certain size, quantity, or other property of a certain asset.
Options contracts are agreements, which may be exchange-traded, among two parties that represent the right to buy or sell a specified amount of an underlying security, asset, or financial instrument at a specified price within a specified time. The parties of options contracts are purchasers who acquire rights, and sellers who assume obligations. Further, a “call” option contract is one giving the owner the right to buy, whereas a “put” option contract is one giving the owner the right to sell the underlying security, asset or financial instrument. There is typically an up-front, non-refundable premium that the buyer pays the seller to obtain the option rights.
Swaps allow entities to exchange variable cash flows for fixed payments. They are similar to options but no premium is paid in advance to obtain the rights. A swap is essentially an outright trade based on the expected movement of the price of the derivative's underlying asset.
Another ownership vehicle for an asset is the fractional ownership model. Simply put, partial and fractional ownership is a way for one to get the most out of an investment by purchasing only the shares one requires, thus reducing the cost of purchase, but providing less than full ownership.
It is believed novel and non-obvious to apply the fractional ownership model to an intellectual property asset. It would be beneficial, once adopting tangible values for intellectual property and related assets, to securitize the intellectual property and create financial markets for the intellectual property using fractional ownership. It is to the provision of such a business model, a financial instruction for the securitization of intellectual property, and the creation of dependable and accurate financial markets for intellectual property assets that the present invention is primarily directed.